Old Carco LLC and RJM I, LLC, as Liquidation Trustee for Old Carco L

UNITED STATES BANKRUPTCY COURT 	NOT FOR PUBLICATION
SOUTHERN DISTRICT OF NEW YORK
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: 	Chapter 11
In re 	:
: 	Case No. 09-50002 (AJG)
Old Carco LLC 	:
(f/k/a Chrysler LLC), et al., 	: 	(Jointly Administered)
:
Debtors. 	:
:
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OPINION AND ORDER DENYING DEALERS’ MOTION FOR AN ORDER
CERTIFYING IMMEDIATE APPEAL TO UNITED STATES COURT OF
APPEALS FOR THE SECOND CIRCUIT
Before this Court is Crain CDJ, LLC’s Motion for an Order Certifying Immediate
Appeal to United States Court of Appeals for the Second Circuit (“Crain Motion”), filed
by Crain CDJ, LLC (“Crain”); and Appellants’ Motion for an Order Certifying
Immediate Appeal to the United States Court of Appeals for the Second Circuit (the
“Wisconsin Motion” and, together with the Crain Motion, the “Motion”), filed by
Boucher Imports, Inc., Braeger Chrysler Jeep, Quaden Motors, Inc. (a/k/a John Quaden
Dodge, Inc.), Johnson Motors of St. Croix Falls, Inc., Lakeland Pontiac-GMC-Jeep, Inc.
(a/k/a Lakeland Oldsmobile-Pontiac-GMC), Mueller Chrysler, Inc., and Wolf’s Motor
Car Company, Inc. (collectively, the “Wisconsin Dealers” and, together with Crain, the
“Movants”).
The Court finds that a hearing in this matter is not necessary and makes its ruling
based on the papers filed by the parties. The Court assumes the parties’ familiarity with
the facts set forth in the Sale Order (as defined infra), the Rejection Order (as defined
Infra), and the Enforcement Order (as defined infra).
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Background
On April 30, 2009, Old Carco LLC f/k/a Chrysler LLC (“Old Carco”) and its
affiliated debtors and debtors in possession (collectively with Old Carco, the “Debtors”)
filed for protection under title 11 of the United States Code (the “Bankruptcy Code”),
which were ordered to be jointly administered.
In connection with Debtors’ Chapter 11 case, Debtors and Debtor subsidiaries,
Fiat S.p.A. and Chrysler Group LLC f/k/a New CarCo Acquisition LLC (“New
Chrysler”) entered into an agreement as of April 30, 2009 (as amended and collectively
with other ancillary and supporting documents, the “Purchase Agreement”) which
provided, among other things, that (a) Old Carco would transfer the majority of its
operating assets to New Chrysler; and (b) in exchange for those assets, New Chrysler
would assume certain of Debtors’ liabilities and pay to Debtors $2 billion in cash
(collectively with the other transactions contemplated by the Purchase Agreement, the
“Fiat Transaction”). Following a sale hearing, an order approving the Fiat Transaction
was entered on June 1, 2009 (the “Sale Order”) and the transaction closed on June 10,
2009. On June 9, 2009, the Court entered an order rejecting the executory franchise
agreements of approximately 789 Chrysler, Dodge, and Jeep dealerships, including the
Movants, pursuant to §§ 105, 365 of the Bankruptcy Code and Bankruptcy Rule 6006
(the “Rejection Order” and, together with the Sale Order, the “Orders”).
After not having been assumed as authorized dealers for the Debtors under the
Sale Order and then rejected as authorized dealers under the Rejection Order, the
Movants commenced actions in state courts or administrative bodies pursuant to state
laws controlling the licensure of automobile manufacturers, distributors, and dealers
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(“Licensure Laws”) seeking a variety of relief against New Chrysler (the “Subject
Actions”). The Debtors and New Chrysler moved before this Court for an order
enjoining the Movants from proceeding with their respective Subject Actions. The Court
granted the Debtors and New Chrysler’s motion and entered an order permanently
enjoining the Movants from proceeding with their Subject Actions and requiring them to
withdraw their petitions or incur sanctions (the “Enforcement Order”). The Movants
have filed Notices of Appeal with respect to the Enforcement Order.
Discussion1
By the Motion, the Movants are requesting, pursuant to 28 U.S.C. § 158(d)(2),
that this Court certify the Appeals to the Second Circuit so that, subject to the consent of
the Second Circuit, the Appeals may be heard directly by the Second Circuit rather than
an intermediate appeal to the United States District Court for the Southern District of
New York.
Relevant provisions of 28 U.S.C. § 158(d)(2) provide:
(A) 	The appropriate court of appeals shall have jurisdiction of appeals described
in the first sentence of subsection (a) if the bankruptcy court, the district court, or
the bankruptcy appellate panel involved, acting on its own motion or on the
request of a party to the judgment, order, or decree described in such first
sentence, or all the appellants and appellees (if any) acting jointly, certify that –
(i) 	the judgment, order, or decree involves a question of law as to which there
is no controlling decision of the court of appeals for the circuit or of the
Supreme Court of the United States, or involves a matter of public
importance;
(ii) 	the judgment, order, or decree involves a question of law requiring
resolution of conflicting decisions; or
(iii) 	an immediate appeal from the judgment, order or decree may materially
advance the progress of the case or proceeding in which the appeal is
taken….
1 In their Consolidated Response to the Motion, the Debtors and New Chrysler state that they do not oppose
certification but also make clear that they do not request certification. Further, in that response, they
strongly disagree with the arguments made by the Movants in support of certification.
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(B) 	If the bankruptcy court, the district court, or the bankruptcy appellate panel –
(i) 	on its own motion or on the request of a party, determines that a
circumstance specified in clause (i), (ii), or (iii) of subparagraph (A)
exists, or
(ii) 	receives a request made by a majority of the appellants and a majority of
the appellees (if any) to make the certification described in subparagraph
(A);
then the bankruptcy court, district court, or the bankruptcy appellate panel shall
make the certification described in subparagraph (A).
28 U.S.C. § 158(d)(2).
28 U.S.C. § 158(d)(2)(A)(i)
The Movants sought relief under 28 U.S.C. § 158(d)(2)(A)(i) by alleging that the
issues on appeal, which essentially revolve around the scope of the “free and clear”
provisions of section 363 of the Bankruptcy Code and the interpretation of the term
“Claims” as defined in the Sale Order, involve questions of law for which there are no
controlling decisions in the Second Circuit. However, these issues were addressed by the
Court in the Sale Order and the Rejection Order and should have been properly raised by
the Movants in an appeal of the Orders. The Enforcement Order is a straight-forward
application of the Orders, barring the Subject Actions, under which the Supreme Court’s
rule in Travelers Indemnity Co. v. Baily, 120 S. Ct. 2195, ____ U.S. ____ (2009)
controls.
The Movants argue that Travelers involved a situation in which “the plain terms”
of the prior order “unambiguously appl[ied] to bar the appellees’ claims against the
debtor’s insurer,” whereas it is ambiguous whether the Orders apply to the Subject
Actions. This alleged ambiguity, in turn, hinges on the Movants’ interpretation of the
term “Claims” in the Sale Order. The Court disagrees with the argument that the term
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“Claims” is ambiguous and also disagrees with the Movants’ interpretation of that term.
Their efforts are simply an attempt to collaterally attack a final order for which all
appellate remedies have been exhausted. To the extent that the Movants believe the term
“Claims” should have been limited to only claims as defined by section 101(5) of the
Bankruptcy Code, they were required to appeal the Sale Order. The distinction identified
by the Movants between the successor/transferee liability claims by the personal injury
claimants against Old Carco and the claims at bar is a distinction without a difference
under the provisions of the Sale Order. The Orders clearly bar the Subject Actions.
Thus, the Court finds that the ruling in Travelers applies to the case at bar and the Subject
Actions are a collateral attack on the Orders.
The Movants further argue that certification is appropriate because the Appeals
are matters of public importance. While the Court finds that the types of public welfare
arguments put forth by the Movants may be relevant in context of the Sale Order and the
Rejection Order, they are not relevant to the Enforcement Order, which involves a routine
application of the Orders.
For the above-mentioned reasons, the Court finds that the Movants have failed to
meet the requirements provided in 28 U.S.C. § 158(d)(2)(A)(i) because they have not
raised a question of law to which there is no controlling decision in the Second Circuit
Court of Appeals or the Supreme Court of the United States and they have not established
that the appeals are matters of public importance.
28 U.S.C. § 158(d)(2)(A)(ii)
With respect to 28 U.S.C. § 158(d)(2)(A)(ii), the Movants have failed to identify
specific grounds under which they sought relief as they did not raise a question of law
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requiring resolution of conflicting decisions. Hence, the Court finds that the Movants
have also failed to meet the requirements provided in 28 U.S.C. § 158(d)(2)(A)(ii).
28 U.S.C. § 158(d)(2)(A)(iii)
The Movants sought relief under 28 U.S.C. § 158(d)(2)(A)(iii) by asserting that
an immediate certification will materially advance the Debtors’ bankruptcy case by
relieving the Debtors’ estate of the time and resources in litigating this matter,
particularly because there is a substantial likelihood of an appeal by the Movants to the
Court of Appeals in the event of an adverse decision by the District Court. However, the
Movants have failed to articulate a legal question about which there is a need for
immediate resolution. Absent a compelling need for immediate resolution, there appears
to be no reason under the circumstances presented that warrant the circumvention of an
appeal to the district court based upon judicial economy and a substantial likelihood that
an adverse ruling may be appealed.
The Court finds that the Movants have failed to meet the requirements provided in
28 U.S.C. § 158(d)(2)(A)(iii) that an immediate appeal to the Second Circuit Court of
Appeals may materially advance the progress of the case at bar.
In sum, since the Movants have failed to meet the requirements provided in 28
U.S.C. §§§ 158(d)(2)(A)(i), (ii), or (iii), certification under 28 U.S.C. § 158(d)(2)(B)(i)
has not been established.
28 U.S.C. § 158(d)(2)(B)(ii)
Further, the Court finds that the Movants have not met the requirements provided
in 28 U.S.C. § 158(d)(2)(B)(ii) that a majority of the appellants and a majority of the
appellees request the Court’s certification for an immediate appeal because the Debtors
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and New Chrysler stated that, although they are not opposed to certification, they do not
request it.
Conclusion
Accordingly, for the foregoing reasons, the Motion for an Order Certifying
Immediate Appeal to the United States Court of Appeals for the Second Circuit is hereby
DENIED.
SO ORDERED.
Dated: New York, New York
October 16, 2009
s/Arthur J. Gonzalez
ARTHUR J. GONZALEZ
UNITED STATES BANKRUPTCY JUDGE
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